03 May '13, 9pm
Bitcoin Is Not as Secure, Unregulated, or Lucrative as You Might Think
I don’t know whether Bitcoin can fix its most severe engineering error, however: the use of a work function that can be done faster by dedicated hardware. Bitcoin depends on there being too many nodes in the system mining, to control them all. That means leveraging the world supply of PC hardware. But at this point, anyone with dedicated silicon is so much faster than PCs that the masses might as well not participate (any more than they participate in making dollars or actually mining gold). This can be fixed by using algorithms like scrypt, which the Bitcoin competitor Litecoin actually does. Whether it will be fixed is an open question. Making this change directly impacts the investments of Bitcoin’s most productive supporters, and it’s rare that any system makes a change that hurts the first batch of people that got wealthy from it.